Encryption Regulatory World Map: Policy Easing in Progress

In recent years, as the encryption market has received increasing attention, the demand for its regulation has become more urgent. Countries have introduced distinctive regulatory policies based on their own economic, financial systems, and strategic considerations. From the ongoing game between U.S. regulatory agencies and encryption companies, to the EU's comprehensive MiCA legislation, and the balance between innovation and risk in emerging economies, the global landscape of encryption regulation presents unprecedented complexity and diversity. Let us unfold the world map of encryption regulation and explore the hidden connections beneath this wave of global regulation.

In this article, we categorize various countries into four types: business hubs, fully compliant, partially compliant, and non-compliant. The criteria for judgment include the legal status of encryption assets (50%), the regulatory framework and the implementation of legislation (30%), and the implementation of exchanges (20%).

Asia

Greater China Region

Hong Kong, China

In Hong Kong, encryption assets are regarded as "virtual assets" rather than currency, and are regulated by the Securities and Futures Commission (SFC). A licensing system is implemented for stablecoins, and the "Stablecoin Ordinance" restricts licensed entities from issuing HKD stablecoins. NFTs are considered virtual assets; governance tokens are regulated under the "collective investment scheme" rules.

The revised "Anti-Money Laundering Regulations" in 2023 require cryptocurrency exchanges to obtain licenses. The SFC has released rules for virtual asset ETFs and is responsible for issuing licenses. Currently, HashKey and OSL are the first to obtain licenses, with over 20 institutions in the application process. Licensed exchanges can serve retail investors. Bitcoin and Ethereum ETFs have been listed in Hong Kong in 2024.

Hong Kong aims to consolidate its position as an international financial center by actively embracing Web3 and virtual assets, particularly by allowing retail trading and launching virtual asset ETFs. This stands in stark contrast to the strict bans in mainland China, as Hong Kong has chosen a completely different path, actively building a clear and regulated virtual asset market. Allowing retail participation and launching ETFs are key measures to attract global encryption capital and talent, enhancing market liquidity and international competitiveness.

Taiwan, China

Taiwan, China, has a cautious attitude towards encryption currencies, does not recognize their monetary status, but regulates them as speculative digital commodities, and gradually improves the framework for anti-money laundering and security token offerings (STO).

Currently, cryptocurrencies are not recognized as currency. Since 2013, the position of the Central Bank of Taiwan and the Financial Supervisory Commission (FSC) is that Bitcoin should not be regarded as currency, but rather as a "highly speculative digital virtual commodity". The legal status of NFTs and governance tokens has yet to be clarified, but in practice, NFT transactions are required to declare capital gains tax. Security tokens are recognized as securities by the FSC and are regulated under the Securities Exchange Act.

The "Anti-Money Laundering Act" regulates virtual assets. The FSA has ordered that local banks are not allowed to accept Bitcoin, nor provide any related services since 2014. For STOs, Taiwan has specific regulations that differentiate regulatory pathways based on the issuance amount. The FSC also announced in March 2025 that it is drafting legislation for virtual asset service providers (VASP), aiming to shift from a basic registration framework to a comprehensive licensing system.

In 2024, FSC will introduce new regulations under the Anti-Money Laundering Act, requiring VASPs to register with FSC before providing any virtual asset-related services. Failure to register may result in criminal penalties. For STOs, the issuer must be a joint-stock company registered in Taiwan, and the STO platform operator must obtain a securities dealer license and have at least NT$100 million in paid-in capital.

Mainland China

The Chinese mainland has comprehensively banned the trading of encryption assets and all related financial activities. The People's Bank of China believes that cryptocurrencies disrupt the financial system and facilitate criminal activities such as money laundering, fraud, pyramid schemes, and gambling.

In judicial practice, virtual currency has corresponding property attributes, and there is basically a consensus formed in judicial practice. Civil law cases generally believe that virtual currency has characteristics such as exclusivity, controllability, and circulation in possession, similar to virtual goods, and recognize that virtual currency has property attributes. Some cases cite Article 127 of the Civil Code, which states "Where the law provides for the protection of data and network virtual property, it shall be implemented in accordance with its provisions," and refer to Article 83 of the "Minutes of the National Court Financial Trial Work Conference" which states "Virtual currency possesses some attributes of network virtual property," determining that virtual currency is a specific type of virtual property that should be protected by law. In the criminal field, recent cases entered into the Supreme People's Court case database have also clarified that virtual currency belongs to property in the sense of criminal law, possessing property attributes in the sense of criminal law.

Since 2013, banks in mainland China have been prohibited from engaging in encryption-related activities. In September 2017, China decided to gradually shut down all virtual currency exchanges within a limited timeframe. In September 2021, the People's Bank of China issued a notice that comprehensively banned services related to settlement with virtual currencies and providing trader information, and made it clear that engaging in illegal financial activities would be subject to criminal liability. In addition, encryption mining farms were also shut down, and the establishment of new mining farms was not allowed. Providing services to residents in China from overseas virtual currency exchanges via the Internet is also regarded as illegal financial activity.

Singapore

Singapore views encryption assets as "payment instruments/goods", mainly based on the provisions of its Payment Services Act. For stablecoins, a licensed issuance system is implemented, and the Monetary Authority of Singapore ( MAS ) requires issuers to maintain a 1:1 reserve and undergo monthly audits. For other tokens, such as NFTs and governance tokens, a case-by-case determination principle is applied: NFTs are generally not considered securities, while governance tokens with dividend rights may be considered securities.

The Financial Services and Markets Act enacted in 2022 regulates exchanges and stablecoins. However, the recently effective new DTSP regulations significantly reduce the scope of licensing compliance, which may affect the offshore operations of encryption projects and exchanges. The MAS typically issues three types of licenses for encryption enterprises: currency exchange, standard payment, and large payment institutions; currently, more than 20 institutions have obtained licenses, including Coinbase. Many international exchanges choose to establish regional headquarters in Singapore, but these institutions will be affected by the new DTSP regulations.

South Korea

In South Korea, encryption assets are regarded as "legal assets" but not as legal tender, primarily based on the provisions of the Act on Reporting and Using Specific Financial Information (the "Specific Financial Act"). Currently, the draft of the Digital Asset Basic Act (DABA) is actively being advanced, which is expected to provide a more comprehensive legal framework for encryption assets. The existing Specific Financial Act mainly focuses on anti-money laundering regulation. For stablecoins, the DABA draft proposes to require transparency of reserves. As for other tokens, such as NFTs and governance tokens, their legal status has not yet been clarified: NFTs are currently regulated as virtual assets, while governance tokens may be classified as securities.

South Korea implements a real-name system for exchange licensing, and currently, five major exchanges including Upbit and Bithumb have obtained licenses. In terms of the establishment of exchanges, the South Korean market is mainly led by local exchanges, and foreign exchanges are prohibited from directly serving South Korean residents. At the same time, the draft of the South Korean "Basic Law on Digital Assets" (DABA) is being advanced, which aims to require transparency in stablecoin reserves. This strategy both protects local financial institutions and market share, and facilitates effective monitoring of domestic trading activities by regulatory authorities.

Indonesia

Indonesia is experiencing a shift in the regulatory authority of encryption assets from the Commodity Futures Trading Regulatory Agency ( Bappebti ) to the Financial Services Authority ( OJK ), signaling a more comprehensive financial regulation.

The legal status of encryption assets has not yet been clarified. With the recent shift in regulatory authority, encryption assets have been classified as "digital financial assets."

Previously, the Indonesian Commodity Law regulated exchanges. However, the recently issued Regulation No. 27 of 2024 OJK ( POJK 27/2024 transfers the regulatory authority for cryptocurrency asset trading from Bappebti to OJK, and this regulation will come into effect on January 10, 2025. This new framework sets strict capital, ownership, and governance requirements for digital asset exchanges, clearinghouses, custodians, and traders. All licenses, approvals, and product registrations previously issued by Bappebti remain valid as long as they do not conflict with current laws and regulations.

The licensing authority has transferred from Bappebti to OJK. The minimum paid-up capital for encryption asset traders is 10 trillion Indonesian Rupiah, and they must maintain at least 5 trillion Indonesian Rupiah in equity. The funds used for paid-up capital must not come from illegal activities such as money laundering, terrorism financing, or financing of weapons of mass destruction. All digital financial asset trading providers must fully comply with the new obligations and requirements of POJK 27/2024 by July 2025.

Local exchanges like Indodax operate actively in the region. Indodax is a regulated centralized exchange that offers spot, derivatives, and over-the-counter )OTC( services, and requires users to comply with KYC.

) Thailand

Thailand is actively shaping its encryption market by encouraging compliant trading through tax incentives and a strict licensing system, solidifying its position as a global financial hub.

In Thailand, owning, trading, and mining encryption currency is completely legal, and profits must be taxed according to Thai law.

Thailand has enacted the Digital Assets Act. Notably, Thailand has approved a five-year exemption from capital gains tax on cryptocurrency sales revenue conducted through licensed encryption asset service providers, a policy that will last from January 1, 2025, to December 31, 2029. This measure aims to position Thailand as a global financial center and encourages residents to trade on regulated exchanges. The Thailand Securities and Exchange Commission ###SEC( is responsible for regulating the encryption market.

The Thai SEC is responsible for issuing licenses. Exchanges must obtain official permission and register as a Thai limited or public company. License requirements include minimum capital (50 million baht for centralized exchanges and 10 million baht for decentralized exchanges) and directors, executives, and major shareholders must meet the "fit and proper" criteria.

Local exchanges such as Bitkub are active in the region and have the highest cryptocurrency trading volume in Thailand. Other major licensed exchanges include Orbix, Upbit Thailand, Gulf Binance, and KuCoin TH. The Thai SEC has taken action against five global encryption exchanges, including Bybit and OKX, to prevent them from operating in Thailand due to their lack of local licenses. Tether has also launched its tokenized gold digital asset in Thailand.

) Japan

Japan is one of the first countries in the world to clearly recognize the legal status of encryption currency, and its regulatory framework is mature and prudent.

In the "Payment Services Act", encryption assets are recognized as "legal means of payment". For stablecoins, Japan implements a strict banking/trust monopoly system, requiring them to be pegged to the yen and redeemable, while explicitly prohibiting algorithmic stablecoins. As for other tokens, such as NFTs, they are regarded as digital goods; governance tokens may be classified as "collective investment scheme rights".

Japan has officially recognized encryption assets as legitimate means of payment by amending the Payment Services Act and the Financial Instruments and Exchange Act in 2020. The Financial Services Agency (FSA) is responsible for regulating the encryption market. The revised Payment Services Act also adds a "domestic holding order" clause, allowing the government to require platforms to keep some user assets within Japan when necessary to prevent the risk of asset outflow. In terms of licensing, the FSA is responsible for issuing exchange licenses, and currently, there are 45 licensed institutions. Key requirements for obtaining a cryptocurrency license in Japan include: having a legal entity and office locally, meeting minimum capital requirements (over 10 million yen with specific fund holding regulations), complying with AML and KYC rules, submitting a detailed business plan, and conducting ongoing reporting and audits.

The Japanese market is primarily dominated by local exchanges such as Bitflyer. International platforms wishing to enter the Japanese market typically need to do so through joint ventures (such as Coincheck).

Europe

EU

As one of the more regulated jurisdictions in the global encryption field today,